4 Things to Consider Before Listing Your Home as a Short-Term Rental
By: Debbie Wysocki
The Age of Sharing is here, and it’s a phenomenon that’s expected to grow from $15 billion in 2014 to $335 billion by 2025, with services such as home-sharing and maintenance platforms being a big part of that equation. Many homeowners have seen big economic benefits over the years from home-sharing platforms like HomeAway, VRBO, AirBNB (although I have found this platform to be a lesser quality tenant) – and you may be surprised that your local Realtor may even have a short-term vacation rental division.
If you’re thinking about jumping in the market to get a piece of the action, there are several things you need to consider:
1) The locations — people want to travel to fun locations:
a) Theme Park areas
b) Beach (sun/surf/scuba/dive/snorkel
c) Ski and snow boarding
d) Destinations that have something to offer . . . not just a family town . . . There has to be an entertainment factor.
2) Know Your Regulations
Not all cities have a friendly attitude towards vacation or what we call short-term rentals–needless to say, many neighborhoods are very family oriented and are concerned about transient populations — and having lots of cars — so it is important to think about your neighbors.
This is why most cities have stringent occupancy standards and off street parking requirements.
Personally, I do not believe in renting rooms — I believe in renting whole houses — and only to single families — I do not rent to college kids or for bachelor/bachelorette parties — as it only opens up a whole host of problems and aggravates neighbors.
In South Florida, each city is quite different, and it is the same in every state, so before you start advertising, make sure you know the regulations.
I am willing to bet, you need a State License, a County License, a business License, a Sales Tax License, and a City License. And more than likely, your home will need to pass a physical inspection. So be prepared. And there are fees to pay to each Licensing Agency and they must be renewed annually.
Also, there are taxes to be paid. AirBNB and VRBO/HomeAway, generally, have struck deals with most States and cities for the bookings made through them that they will pay the taxes directly to the Taxing Authorities; however, any bookings made outside of these agencies, you are responsible for collecting and filing taxes on the schedule set by that Taxing Authority
Should you not follow the regulations, many cities can fine you $1,000 a day or more per violation. And, you can even lose the ability to rent your property as a short-term rental.
3.) Do You Have the Proper Insurance Coverage?
If you are going to rent your home out, make sure you don’t put your great grandmother’s antiques in it — because life happens.
And, when you purchase furniture — look for durable products — I go with Leather — and fabric that is stain resistant. On Linens — all white because you can bleach the heck out of them.
And, you get a security deposit. I opt for a cashier’s check — not credit cards — we don’t cash the cashier’s check unless there is damage — and in 17 years, we had maybe 6 times there is damage.
On HomeAway, guests do have the option of purchasing insurance for $99 (but I always insistent upon my security deposit as well).
Collecting damages from AirBNB is a challenge — and in fact 4 of the 6 times I have had damages has been with AirBNB and one of those times was with a Cleveland Cavalier’s basketball player!!! and He would not pay up.
Because of how I screen my clients, I have very few problems — and my Lease is IRON CLAD. They understand from the beginning they are responsible — they sign an inventory sheet and it spells everything out.
4.) Cancellations. I have a STRICT no cancellation policy. Once you pay, you are locked in (even if you cancel within 48 hours). Our Lease is 8 pages long and it covers every possible aspect of what happens at the house, arrival time, departure time, housekeeping, if you smoke at the house, if you leave the house excessively dirty, if you lose keys, if you have more people than permitted, if you hurt yourself we are not liable, if the utilities go out, there are no refunds, security deposits, and of course a concierge check in — so they know how to work everything.
Having a Vacation Home can pay for your retirement home OR your Vacation Home — in addition to providing additional income, depending upon the location.
Planning is the key.
If you are not prepared to handle all of the above details and respond to inquiries and middle of the night challenges with tenants, then turn your Vacation Rental over to a Concierge Vacation Management Company — note — NOT a discount management company — because you will be disappointed in the results.
If you have questions about how to go about getting started, please feel free to reach out to me. Twenty-five percent of my business is Luxury Vacation Rentals on the Ocean or close to the Beach — this has been my specialty for almost 20 years — and it is how I have met many of you.
Thank you for the opportunity to serve you.